Session 1 – 18 MAR – GENERATING ALPHA, PORTFOLIO DIVERSIFICATION AND OFFERINGS – SECURING INCOME FROM ALTERNATIVES
From your point of view, what solutions should be adopted to create value in the current private market?
I don’t think there is a unique solution to create value. When the range of opportunities is narrowing in the equity and bond markets, after a decade of hunt for yield in listed markets, investing in non-listed companies or assets provides access to diversification, yields and even lower risks sometimes than in their listed counterparts. Private equity managers can provide differentiated value through active participation and operational value creation in ‘inefficient’ markets. Private debt managers, in a low-yield environment offers investors an interesting supplement to fixed-interest assets. And I do think we are somehow better off with the collateral offered by private debts in case of a deterioration of the economic conditions than with the holding of UCITS high yield funds. The value here is in the fund manager selection, the “founding father” of a diversified investments portfolio with a better risk-adjusted return profile.
From your perspective, what is the actual scenario for hedge funds and returns? What opportunities?
I think that in the first place you have to take into account that the rules of the market have changed. In the United States, the stock market has opened up to smaller investors in recent months. Since the beginning of the Covid-19 crisis, many stocks have fallen, allowing an entry into the world of the stock market with low investment and these new market players are not to be taken lightly. The GameStop affair is a perfect example. This temporary revenge of small investors on the big ones shows that no economic player is untouchable, not even the big “hedge funds”. And this point is often forgotten by some HF managers. Fast forward to 2021, hedge funds weathered the recent volatility of 2020 remarkably well, particularly considering the COVID-19 epidemic. Thus, hedge funds are, once again, making their mark on Wall Street. These ups and downs lead us to ask: will hedge funds still be around in 10 years? Once high-flying alternative investments, hedge funds lagged behind much of the market over the past several years. More recently, however, hedge funds have proved resilient throughout the volatility caused by the COVID-19 epidemic and are attracting significant investor attention. Overall, our view is that hedge funds will continue to grow but will adapt to lower fees, greater use of technology, and increased access to retail investors. In terms of strategies that could generate performance for investment funds, green finance is indeed a segment with wind in its sails.
What opportunities do you currently see for the investment in Structured Products?
Equity Income is all over the place! The bond market isn’t very interesting currently with credit spread very tight and rates very low, but also investors are feeling that we have seen the low tide on rates levels. Structured products allow investors to invest in all asset classes, with tailored protection, and offer solutions that can be adapted to the needs of each investor and for every market environment. This type of investment can be a useful tool for portfolio management and risk control, especially during this pandemic time.
With uncertainties around COVID and how the stock market will behave, investors are really looking at Structured Products for yield generation but with strong protection to avoid any new downturn. Hence, we are seeing a strong incentive for investors to invest Into Autocall / Phoenix structures currently.
On top of that, sustainable investing especially in ESG is on the rise when investing in structured products. Being socially responsible has become a key goal for many companies. Access to instruments that focus on ESG has become widely available due to investors putting pressure on wealth managers and advisers like us, to examine the social responsibilities of companies. Thanks to their great adaptability, structured products are a tool of choice to invest in this thematic because it allows you to invest easily in the best selection of ESG companies in the function of your needs.
Lastly, the biggest opportunity is certainly digitalization. Automatized reporting, instant multi-issuer pricings, first market-timing and risk adequation tools, there are many reasons for an investor to look for a more efficient way of handling Structured Products. Thanks to Lassie, our digital service platform on structured products that combines a digital and human interface, we help them go digital!
WEBINAR 25 MAR – THE USE OF TECHNOLOGY IN ALTERNATIVE INVESTMENTS
From your perspective, how is technology impacting engagement and social interaction?
I do think that it would have been an even bigger social disaster if we had had to face COVID in 2000 rather than in 2020! Hence Technology impacted our life more than ever in 2020.
The use of video conferencing software, in each area of our life, makes us more contactable for any of our clients or colleagues. The development of these media allows us to increase the quality of our information networks, and thus increase the quality of our communications and social interactions. We invest a lot in our software to develop a high-performance and user-friendly platform for structured products offer.
There is still room for improvement of course, and we are working hard to find ways to connect Pension funds in Africa with their counterparts in Europe and the US noticeably, to help with foreign investments in Africa. We came across a US solution recently that we plan on offering soon to the continent.
As Associate Sponsor of PIAfrica, what are the main benefits of the virtual event to your company?
As an asset manager and financial advisor with strong roots in Africa, we wanted to share our strong convictions to pension fund investors connected with the African market. We do think this event allowed us to assert our position as a local manager and advisor, but also increased our visibility with the market players with whom we would have the opportunity to work. Finally, it gave us the opportunity to communicate our vision of the international capital markets, the importance of diversification in the alternative investments space and the benefit of technology for Structured Products users to the key players in Africa.